Question: USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM Stock Beta Current Price Expected Price Expected Dividend X 0.8 $12.50 $13.10 $0.80 Y 1.1 $ 8.25

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM

Stock Beta Current Price Expected Price Expected Dividend
X 0.8 $12.50 $13.10 $0.80
Y 1.1 $ 8.25 $ 9.76 $0.20
Z 2.1 $25.70 $30.04 $0.00

Refer to Exhibit 7.4. Which of the following statements is correct?

a. Stocks X, Y, and Z are overvalued.
b. Stocks X and Y are overvalued, and stock Z is undervalued.
c. Stocks X, Y, and Z are undervalued.
d. Stocks X and Y are undervalued, and stock Z is overvalued.
e. Stocks X, Y, and Z are all properly valued.

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